Slice Fintech: Rising Fast, but at What Cost?

In a financial feat, Slice, the Indian Fintech unicorn, has seen an extraordinary surge in its operating revenue, catapulting over 12 times to Rs 847 crore in the fiscal year 2022-23. However, challenges loom as Non-Performing Assets (NPA) spike, and losses show a significant increase. Slice, founded by Rajan Bajaj, has reported an impressive growth trajectory, with its operating revenue skyrocketing from Rs 68 crore in FY21 to a staggering Rs 847 crore in FY23. Intriguingly, despite this colossal growth, losses grew fourfold during the same period, indicating a complex financial landscape.

Slice’s Year-on-Year Growth

Detailed financial statements sourced from the Registrar of Companies (RoC) highlight a consistent threefold increase in Slice's revenue from Rs 283 crore in FY22 to Rs 847 crore in FY23, emphasizing the firm's sustained year-on-year growth.

Slice's core focus on millennials through physical and virtual card services has enabled students and salaried professionals to make collateral-free purchases on estimated monthly installments (EMIs), thereby building credit scores. A staggering 56% of Slice's operating revenue is attributed to interest income from portfolio loans, surging 3.5 times to Rs 472 crore in FY23 from Rs 134 crore in FY22.

Slice’s Cost and Expenditure Analysis

Delving into the financial intricacies, employee benefits witnessed a 2.9X surge to Rs 287 crore in FY23, which includes a Rs 40 crore component as Employee Stock Ownership Plan (ESOP) cost. Simultaneously, the finance cost or interest expenses for lending activities increased 2.6 times to Rs 169 crore.

The overall expenditure for Slice, including advertising, subscription membership, IT, legal professional, and other overheads, surged 2.3 times to Rs 1,273 crore in FY23. Alarmingly, the NPA under the loss on financial assets, loans, and advances soared to Rs 256 crore from Rs 58 crore in FY22.

Slice's recent strategic move includes the merger announcement with North East Small Finance Bank (NESFB) in October 2023, a pivotal step to expand their financial accessibility. The merger follows Slice's acquisition of a 5% stake in NESFB for approximately $3.42 million in March the previous year.

Slice Funding

With a cumulative funding of over $340 million, key investors Tiger Global and Insight Partners hold 7.9% and 6.6% stakes in Slice, respectively. Founder and CEO Rajan Bajaj commands a 9.3% stake.

Despite challenges, including disruptions from RBI's rule changes in August 2022, Slice's resilience is evident. While losses grew by 59.8% to Rs 406 crore in FY23, the company's commitment to sustainability and the impending NESFB merger signal a path forward.

Slice's financial journey, marked by unprecedented growth and challenges, paints a nuanced picture of the evolving Fintech landscape in India, with stakeholders closely watching its strategic moves and financial resilience.

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